Labour swaps private data with tycoon

A millionaire businessman has given the Labour Party a pounds 300,000 state-of-the-art computer system in return for being allowed to use and sell-on information stored on it.

Philip Jeffrey, the multi- millionaire entrepreneur who made his fortune from the Fads DIY chain, has set up a business to provide the party's new media centre with the latest computer hardware and software.

In return for this, he will try to sell the information and the expertise his company has gleaned to other commercial organisations and political parties round the world.

Mr Jeffrey's donation was kept under wraps by party officials when they launched their pounds 2m media headquarters earlier this year with the computer system - codenamed Excalibur - as its electronic heart.

Dubbed "Mandelson Tower" by some party activists, the centre, which is modelled on a United States-style presidential race headquarters, will be run by Peter Mandelson, head of the election campaign team.

Until recently, Mr Jeffrey, a Labour supporter, owned the New Statesman and Society, the left-wing weekly magazine. The company that owns Excalibur is called New Statesman Database but it has no connection with the magazine, which he has sold to the wealthy Labour MP Geoffrey Robinson. The company is entirely owned by Mr Jeffrey and as well as him, has two other directors, Pat Coyne and Peter Jones.

Excalibur is the most powerful weapon in Labour's general election armoury. It enables party workers instantly to rebut claims and accusations from their opponents. When the Scott report on arms to Iraq was published, all 1,800 pages were scanned into the system in five hours, to make it easier to find the key quotes.

The huge database contains all Labour politicians' recent speeches, statements and policy documents. Publicly available material by and about its political opponents, including their speeches and gaffes, is also included. The whole system is linked to the Internet.

Party officials have denied claims that the database will store canvass returns and confidential political views of millions of people.

"We are proud of it, it says a lot about the Labour Party - it is tough, it is professional and it is going to work," Mr Blair said about Excalibur at the centre's opening.

Party sources said that Mr Jeffrey was contacted after a national media group had been approached but declined to become involved - for fear of compromising its political reputation.

Rather than buy a system, officials decided to lease one, for free, from a private company. "They said, 'you pay for it to be installed and after the election we will hand it back to you for you to do what you want'," a businessman close to the negotiations said. The deal is another example of the willingness of Labour under Tony Blair to form close relationships with the business community.

Mr Coyne, of New Statesman Database, said Excalibur was intended as "a rebuttal tool". The arrangement, he said, had been structured through a private company, "to keep it separate from Labour Party finances".

Mr Jeffrey, his co-director said, had not yet decided what to do with the system after the general election.

A Labour Party spokesman said Excalibur was "like a giant electronic library". The system was owned by Mr Jeffrey's company but, the spokesman said, "day-to-day management was a matter for the Labour Party".

The spokesman said that Mr Jeffrey was "very keen to ensure a Labour government". New Statesman Database, he added, would retain "a strategic interest" in the project. "Anybody who needs to index a lot of documents would have a commercial interest in it."

The party official stressed, however, that "it is not our intention to sell confidential information about anybody. A lot of the information on the system at the moment is available publicly".

Mr Jeffrey was overseas and unavailable for comment yesterday.